22 Jan 2014 07:00
22 January 2014
GLI Finance Limited
NAV and Trading Update for the quarter ended 31 December 2013
GLI Finance Limited ("GLIF" or "the Company") today announces its unaudited net asset value as at 31 December 2013.
The Company's unaudited net asset value (NAV) per share as at 31 December 2013 was 50.0p. This compares to the unaudited NAV of 51.8p as at 30 September 2013. The drop in net asset value was principally due to a reduction in the value of the Company's US dollar-denominated CLO positions.
Trading Update
During the quarter, the Company negotiated a number of transactions that the Board believes will provide the platform with the opportunity to develop its SME finance business in the UK, in Europe and in the US. The Board expects the coming year should be another year of significant positive change for the business, as it continues to diversify its revenues by asset and geography, whilst maintaining its strategic focus on SME finance.
Existing Platforms
There was significant strategic progress for all of the Company's existing platforms during the quarter.
CLO Investments
As has been previously flagged, the Company is working closely with GMB Partners on the optimal way for the Company to realize value from its CLO investments over time. Preparatory work for the potential transfer of the CLO portfolio into a separately listed fund is underway and we are intending to assess market support for an offering in the first half of the year.
BMS Finance
The core loan business continues to trade successfully. It was successful in its application for £15m matched funding from the Business Bank and it is expected that this money will start to be put to work in the first half of 2014.
FundingKnight
Having lent just under £1m by July 2013, when GLIF bought its stake, FundingKnight has now lent approximately £3.5m. The maximum loan size was increased from £100k to £150k during the quarter, accelerating the loan book growth. GLIF has invested over £1m through the FundingKnight platform into SME loans and will continue to support the growth of the business.
Platform Black
Platform Black continued to finance a significant number of invoices; totaling over £36.5m in value in 2013. This includes significant growth in both the Invoice Trading and Supply Chain Finance services. The average auction size has been rising and the average cost of funding invoices falling, indicating that the building blocks are in place for growth in 2014. The company invested £163k over the Platform in 2013, all of the invoices acquired have matured and repaid in full generating a deal IRR in excess of 13%.
Other investments
Lombardia Capital Partners ("LCP") agreed to buy the Company out of its warrant position, via a swap of the warrant for an increased balance on its loan from GLIF of $795k (a 60% uplift on the acquisition value in 2011). In addition, LCP repaid $1.1m of the existing principal and thus the outstanding loan reduced by $305k.
New Platforms
In order to provide the Company with a broad range of platforms through which to put its capital to work, it has been negotiating a series of partnerships with businesses complementary to its existing platforms. In the fourth quarter and the beginning of the first quarter, the following transactions have been agreed, providing the Company with significant diversification from both an asset and geographic spread, whilst maintaining its focus on SME finance.
TradeRiver Finance
TradeRiver Finance is a non-bank online funding solution which finances trade, both cross-border and in the UK. The company provides businesses with finance to purchase goods and services through a convenient online platform. Over the last three months, the amount TradeRiver has loaned to businesses has grown by 18 per cent to a total of £24 million.
It is intended that GLIF will be providing TradeRiver with a £2m borrowing facility, and takes a 10% stake in the equity of the business for £800k. We expect the loan to be drawn down over time, as TradeRiver's book of business grows.
Raiseworks
GLIF invested $1.5m in the US peer to peer SME lending business, Raiseworks, LLC ("Raiseworks"). In return for the investment, GLIF will have at least a 30% share in the business. The Raiseworks business began in 2011, to improve small business access to credit and to increase investment opportunities in small businesses. The Raiseworks team has spent the past two years building the platform, developing the credit underwriting model, establishing partnerships, and securing a broker dealer license.
The Raiseworks platform automates the private capital formation process by bringing increased efficiency and transparency to businesses and investors. It utilizes one of the largest private company databases in the United States and a suite of proprietary, predictive algorithms in an effort to provide community members with an information advantage.
Finpoint UK
Finpoint UK will be a joint venture between CRX (the German company that owns Finpoint) and GLIF. The platform provides financial institutions with the opportunity to acquire loans direct from SMEs; a similar model to P2P, but with larger loan sizes and a solely institutional focus.
After a successful three years in Germany, Finpoint approached GLIF, as it wished to enter the UK market but wanted a local partner to help shape the strategy. It is intended that GLIF will have a 75% equity stake in the UK business for £1.25m, in a combination of ordinary and preference shares, CRX will subscribe for the remaining 25%.
Sancus
GLIF acquired a 7.4% stake in Sancus, an offshore peer-to-peer secured lender with significant permanent capital, run by a highly experienced team of professionals who have been in the financial sector for over 25 years. Its target market is entrepreneurs, SMEs, HNWIs and professionals and it offers attractive returns to clients who wish to participate in co-investment lending opportunities. Sancus takes a holistic approach when reviewing complex borrowing opportunities and takes into consideration a potential borrower's total asset base, while making decisions quickly and providing certainty to potential borrowers. Sancus will also co-invest in all deals, providing comfort to fellow lenders.
European Receivables Exchange (Dansk Faktura Børs)
The company is an invoice discounting business, currently principally in Denmark but has the potential to broaden its reach across Europe. It is different from Platform Black not only geographically but also in the fact that there is no fractional bidding and bids are quoted in percentage of the invoice face value. Terms have been agreed for the Company to invest for a 5% stake in the business.
Proplend
Heads of Terms have been signed for GLIF to invest £1m in Proplend, in a combination of equity and preference shares, for a 22.5% stake in the business. Proplend is a secured P2P lender run by an experienced property team with a differentiated product, it has already completed its first commercial property loan and is expected to be fully launched online by the end of Q1 2014.
CrowdShed
CrowdShed is creating a new and disruptive multi-faceted approach to crowd funding, bringing together rewards and donations with equity and commercial debt opportunities.GLIF has agreed a Heads of Terms for an investment to acquire a 26% stake in the business, giving GLIF exposure to the fast growing financial crowd funding industry. CrowdShed will also provide opportunities for GLIF to participate in a variety of assets as different products and funding campaigns are launched on the platform.
Future strategy
It is expected that the partnerships now agreed will form the core of the GLI Finance business in the future. We continue to actively examine other opportunities where we believe that a partnership would both add value to and be complementary with the existing platforms, but we now have the breadth of business required to ensure that we can redeploy the proceeds of realization of the CLO assets in a timely manner. As the Board would expect at least a comparable long term return from the new platforms as those delivered by the CLO investments, the Company remains committed to its current dividend policy.
Ends
For further information, please contact:
Geoffrey Miller
GLI Finance Limited
+1 203 916 0003
+44 7408 830719
Panmure Gordon
Dominic Morley
Fred Walsh
+44 (0)20 7886 2500
Ed Berry
Jack Hickey
FTI Consulting
+44 (0) 207 269 7297/196
About GLI Finance
GLI Finance is a specialist provider of finance to small and medium sized enterprises and is quoted on AIM. GLIF both invests in loans to SMEs and originates finance for SMEs through a variety of finance platforms. SME loan investment is currently primarily in US and European senior secured loans of mid-market size mainly via CLO equity holdings. SME finance origination is primarily in the UK, and was established through the acquisition of BMS Finance in November 2012, and investment in crowd lending platform FundingKnight in July 2013 and in invoice trading platform Platform Black in August 2013.